FREE TRADE AGREEMENT (Syllabus: GS Paper 3 – Economy)

Context: Recently, the strategic partnership between India and Saudi Arabia further strengthened as they signed eight agreements, underscoring their commitment to enhancing cooperation in energy, trade, defense, and security.

• The two leaders also endorsed plans to resume and expedite negotiations for an India-GCC FTA. The Gulf Cooperation Council (GCC) is India’s largest trading partner bloc with annual bilateral trade valued at over $150 billion. 

Free Trade Agreement (FTA)

• It represents an agreement between two or more nations aimed at lowering obstacles to the exchange of goods and services among them.
• Under such agreements, products and services can move across international borders with minimal or no government-imposed tariffs, quotas, subsidies, or prohibitions to impede their flow.
• The idea of free trade stands in contrast to trade protectionism or economic isolationism, emphasizing openness and the removal of barriers to international trade.

Gulf Cooperation Council (GCC)

• About: GCC is a political and economic alliance of six countries in the Arabian Peninsula. 
• Countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
• Establishment: In 1981, 
• Objective: To promote economic, security, cultural and social cooperation between the six states and hold a summit every year to discuss cooperation and regional affairs.
• GCC countries contribute: Almost 35 percent of India’s oil imports and 70 percent of gas imports.